Most Americans across the political spectrum want Congress to find a way to curb illegal immigration. Responding to public concern, the House of Representatives in 2005 passed an immigration bill weighted entirely to enforcing the current law. The Senate in 2006 and again in 2007 considered immigration reform legislation that would have beefed up border and interior enforcement but would also have expanded opportunities for low-skilled workers to enter the country temporarily and legalized millions of unauthorized workers already here.
While the two Senate bills differed in certain details, the legislative outcome was practically the same. In 2006 the Republican-controlled Senate passed a reform bill, but it died for lack of a companion bill in the GOP-controlled House. In 2007 the Democratic Senate failed to muster enough support among Republican members to close debate and vote on final passage. Congressional leaders made no effort to revive immigration reform in the presidential election year of 2008, leaving it up to a new president and new Congress in 2009 to tackle the problem.
The issue of illegal immigration will not go away on its own. As was initially noted in chapter 1, and according to the most widely accepted estimates, about 12 million foreign-born people are living in the United States without authorization, and that number is growing by 400,000 to 500,000 a year.1
Any lasting solution to the challenge of illegal immigration must recognize the important contribution that immigration has made and continues to make to the success of America’s free-market economy. To succeed, comprehensive reform must accommodate the legitimate needs of American employers to hire the workers they require to meet their customers’ demands, while ensuring that immigrants will not impose an undue burden on U.S. taxpayers. The challenge for Congress and the president is to enact a comprehensive reform of U.S. immigration laws that is not only politically salable but also consistent with the realities of the American labor market.
Despite the claims of critics of immigration reform, America is not being “flooded” with immigrants. When we consider the rate of immigration—the number of immigrants entering the United States each year as a share of our population—the current inflow of immigrants is well within American historical norms. Since 2000, the annual number of legal immigrants joining the U.S. population has averaged 3.4 per 1,000 U.S. residents. That compares to a rate of 10.5 immigrants per 1,000 in the decade of 1901–10 at the peak of the Great Migration. In fact, today’s immigration rate is lower than during any decade between 1840 and 1930.2 (See figure 12.1.)
The number of foreign-born residents as a share of the U.S. population is also below historical highs. In 2006 foreign-born residents represented 12.5% of the population, below the peak of 14.7% in 1910.3 A higher share of U.S. residents was foreign-born in every decade from 1860 through 1920, compared to today. If we are an immigrant nation today, we were more of an immigrant nation a century ago.
Immigration has allowed the U.S. population to maintain a modest and, in fact, declining rate of growth. During the twentieth century America’s population growth averaged 1.32% per year. Since 2000 it has actually fallen to slightly below 1%. Only one other period in U.S. history has witnessed slower population growth than we have seen in recent decades—the Great Depression of the 1930s.4 Immigration has not spurred a population explosion in the United States; it has saved the United States from a population implosion.
Low-skilled migrant workers enter the United States in response to demand in our labor market. Two powerful—and positive—economic and demographic trends have driven the continuing inflow of unskilled immigrants to the United States.
FIGURE 12.1. AMERICAN IMMIGRATION IN PERSPECTIVE BY DECADE, 1870–2007
Source: Office of Immigration Statistics, 2007 Yearbook of Immigration Statistics (Washington, DC: Department of Homeland Security, September 2008).
First, on the demand side, the U.S. economy continues to create hundreds of thousands of net new jobs each year that require relatively low-level skills. Although the fastest growing categories of new jobs being created in our increasingly sophisticated economy require at least some specialized skills, training, and education (as was noted more fully in chapter 6), jobs are also being created in lower-skilled, mostly service sectors that complement the higher-end jobs.
According to the U.S. Department of Labor, between 2004 and 2014, the U.S. economy will add several million net new jobs that require only short-term, on-the-job training. The largest growth is occurring in the categories of retail salespersons; janitors and cleaners; waiters and waitresses; food preparation and serving workers (including fast food workers); home health and personal care aides; laborers and hand-movers of freight, stock, and other materials; and landscaping and groundskeeping workers. Net new jobs to be added in those categories alone during the decade will amount to 3.4 million.5
Second, on the supply side, the pool of native-born Americans who have traditionally filled such jobs continues to shrink as we become older and better educated. According to the Labor Department, the median age of Americans in the workforce has been rising as the Baby Boomer cohort moves through middle-age toward retirement. As a result, the median age of U.S. workers will soon reach 41.6 years, the highest in American history.6
As American workers have been growing older, they have also become better educated. In the early 1960s fully one-half of adult Americans in the workforce did not possess a high school diploma. By 2004 only 6.6% of native-born American adults were laboring without a high school education.7 In absolute numbers, the number of high school dropouts in the workforce declined by 4.6 million between 1996 and 2004.8 Looked at another way, in the 1960s high school dropouts outnumbered college graduates 4 to 1; today, college graduates outnumber dropouts 5 to 1.
A better educated labor force is a profoundly positive development for our country, but it also means that fewer workers are available and willing to claim the still growing number of jobs in our economy that require few skills and minimal formal education. By filling this gap, immigrant workers enable important sectors of the U.S. economy, such as retail, construction, landscaping, restaurants, and hotels, to continue to grow and meet their customers’ needs. Because of low-skilled immigration, those sectors have been able to expand, attract investment, and create middle-class jobs in management, bookkeeping, marketing, and other areas that employ native-born Americans.
Despite these powerful economic and demographic realities, our immigration system contains no legal channel for lower-skilled foreign-born workers to enter the country legally to fill the jobs that an insufficient number of Americans want. Visa categories such as the H-1B program exist for highly skilled foreign-born workers such as computer scientists, physics professors, and even think-tank policy analysts. Other categories exist for close family relatives of immigrants already in the country legally. But there is virtually no legal option open for a peaceful, hardworking twenty-four-year-old in Mexico or Central America who knows of a job in the United States for which no Americans are available. The result of this missing channel in our immigration system, unfortunately, is wide-scale illegal immigration.
For the past twenty years, the U.S. government has pursued an enforcement-only policy in its effort to curb illegal immigration. Since the late 1980s, spending on border enforcement has grown exponentially. The number of Border Patrol officers grew threefold between 1986 and 2002 and doubled again during President George W. Bush’s two terms in office.9 Various operations at the busiest crossing points on the U.S.-Mexican border have resulted in miles of fencing being built through urban areas and into the surrounding desert.
Since 1986 U.S. employers have been subject to fines for knowingly hiring undocumented workers. Interior enforcement of those laws has waxed and waned over the years. In the late 1990s the Clinton administration raided hundreds of workplaces and detained thousands of illegal workers, and the Bush administration stepped up such raids again in 2007. However, there is no evidence that more vigorous interior enforcement has had any long-term effect on the number of illegal workers entering the country.
Along with the futility of interior enforcement, the policy also threatens to draw resources away from policing employment at such critical infrastructure as airports and nuclear power plants. In the aftermath of the September 11, 2001, terrorist attacks, the U.S. government rightly refocused its enforcement efforts away from chicken-processing plants and discount stores to protect the American homeland from people who intend to do us harm.
The most rational, cost-effective way to reduce illegal immigration is comprehensive immigration reform, including a sufficiently accommodating temporary worker program. Enforcing a fundamentally flawed system is a recipe for frustration and wasted tax dollars. The law must be changed to reflect the fundamental realities of our nation’s labor market and economy.
The key to successful reform will be the temporary worker program. Any real hope of reducing illegal immigration will depend on allowing a sufficient number of foreign-born workers to enter the United States legally to fill the growing gap at the lower rungs of the labor ladder. Without a workable temporary visa program, workers will continue to enter the United States illegally, with all the consequences that flow from that.
Skeptics of immigration reform point to the 1986 Immigration Reform and Control Act (IRCA) as evidence that reform and legalization cannot work. The 1986 act contained two major provisions: it offered legal permanent resident status (i.e., a green card) to 2.7 million illegal workers who had entered the country before 1982 and to certain agricultural workers, and it significantly ramped up enforcement efforts, including—for the first time in U.S. history—making it illegal for employers to knowingly hire illegal workers. Notably missing from IRCA, however, was any provision to expand the opportunity for low-skilled workers to enter the country legally. The pool of illegal workers was drained temporarily by the amnesty, but it soon began to fill up again as the economic pull of the U.S. labor market overwhelmed even the stepped up enforcement efforts. IRCA failed to make any provision for our nation’s future need for legal immigrants.
Large-scale illegal immigration will end only when America’s immigration system offers a legal alternative. If foreign-born workers are allowed to enter the country through a safe, orderly, and legal path, the number choosing to enter illegally will drop sharply. Would-be immigrants would then face a choice. On the one hand, they could pay a smuggler $2,000, risk robbery and death in the desert, live a shadowy existence in the underground U.S. economy, and be unable to leave and return freely to visit home. On the other hand, they could enter the United States across a legal port of entry with legal documents, enjoy the full responsibility and protection of the law, and have the freedom to visit home without fear of being denied reentry. Given that choice, the large majority of potential entrants will chose the legal path.
We know from experience that legal immigration, if allowed, will crowd out illegal immigration. In the 1950s the bracero program allowed Mexican workers to enter the country temporarily, typically to work on farms in the Southwest. Early in that decade, illegal immigration was widespread because the program offered an insufficient number of visas to meet the labor demands of a growing U.S. economy. Instead of merely redoubling efforts to enforce a flawed law, Congress dramatically increased the number of visas to accommodate demand. As a result, apprehensions of illegal entrants at the border soon dropped by more than 95%.10 Back then, as we could expect now, foreign-born workers rationally chose the legal path to entry when it was available. When the bracero program was abolished in 1964, illegal immigration began an inexorable rise that continues to this day.
If the goal is to curb illegal immigration, any temporary worker program must offer a sufficient number of visas to meet the legitimate demands of a growing U.S. labor market. The fact that 400,000 to 500,000 foreign-born workers join the U.S. labor force each year indicates the general magnitude of how much demand exceeds the supply of available, legal workers. A temporary worker program should offer at least that number of visas to allow the revealed demand of American employers to be met legally.
Capping the number of visas much below that level will be self-defeating. In both the 2006 and 2007 immigration bills, the Senate approved amendments offered by Sen. Jeff Bingaman (D-New Mexico) that would have capped the annual number of temporary visas at 200,000. That number would still leave a large number of jobs in the United States without sufficient legal workers available to fill them. A similar cap in a future immigration reform bill would almost certainly guarantee a continued inflow of illegal workers, defeating one of the central goals of immigration reform.
Fears that a flood of immigrants will overwhelm the United States if the temporary visa numbers are not tightly capped are unfounded. First, legalization does not necessarily mean more immigrants entering the United States. As I have argued, the most likely consequence of a temporary worker program, as with expansion of the bracero program in the 1950s, would be the transformation of an illegal flow into a legal flow. The number of workers entering the country illegally has already been effectively capped by the demand in the U.S. labor market. If jobs are not available, the workers will not come.
Second, a workable legalization program could be expected to restore the traditional circularity of Mexican migration to the United States, increasing the number of foreign-born workers who leave the country after a temporary period of work. Many low-skilled workers enter the U.S. labor market to solve temporary problems back home. They send remittances home to help pay medical bills, upgrade housing, raise capital for a business, or smooth the family’s income during an economic downturn. As noted in chapter 7, once such goals are achieved, a large share of workers chose in the past to return home. Current immigration law and most proposed legislation limits the potential for the redevelopment of immigration circularity. Based on past experience, we could expect that an increase in the number of workers entering the country after legalization would be largely or wholly offset by an increase in those leaving.
Third, any fears of “chain migration” can be addressed by restricting the immigrants’ ability to sponsor extended family members. One possible compromise would be to restrict or eliminate quotas for elderly parents, adult siblings, and adult children of legal permanent residents in the United States. The ability to sponsor relatives could be limited to the “nuclear family” of spouses and minor children. The result would be to allow nuclear families to remain intact, while at the same time incrementally moving the U.S. immigration system from one that is primarily family based to one that is employment based.
Fears about chain migration tend to be exaggerated. A Web memo published in May 2006 by Robert Rector of the Heritage Foundation estimated that the 2006 version of the Senate immigration reform bill, S 2611, would increase U.S. immigration by a whopping 103 million during the next twenty years.11 But we know from our experience from the 1986 Immigration Reform and Control Act that a flood of new immigration is not likely to occur.
As mentioned earlier, IRCA legalized 2.7 million undocumented workers. In the twenty years since IRCA was enacted (by coincidence the same time frame examined in the Heritage memo), the United States has accepted an average of 950,000 legal immigrants per year. Subtracting the baseline annual immigration of 600,000 in the decade before IRCA, and the 2.7 million workers directly legalized by the IRCA amnesty, the annual increase since then amounts to fewer than 200,000 a year from pre-IRCA levels.12 That is an increase of about 4 million over a twenty-year period, and a significant share of that increase can be attributed to a 1990 immigration bill that raised quotas for legal immigration. Obviously, the 1986 amnesty did not cause anything like a flood of chain migration. There is no reason to believe that a comprehensive immigration bill would either.
An analysis by the Immigration Policy Center (IPC) exposed a number of flaws in the Heritage study. The IPC found that the study double-counted millions of new immigrants, first as guest workers, then again as new green-card holders. It substantially overestimated the number of illegal immigrants who would remain in the United States permanently as well as the number of parents of newly naturalized citizens who would immigrate while ignoring millions of immigrants who would later choose to leave.13
In contrast to the Heritage numbers, the Congressional Budget Office (CBO) estimated that the 2006 Senate bill would have increased the U.S. population by 7.8 million in the first ten years. Although more chain migration would be expected in the second decade after the original temporary workers achieve citizenship, the rate of 800,000 immigrants per year is far more in line with recent history and the expected need of the U.S. economy for new workers.14 A similar CBO study of the 2007 reform bill concluded that the net change in the U.S. population by 2027—the same twenty-year time horizon as studied in the Heritage estimate—would be “negligible.”15
Any temporary worker program must also include complete worker mobility. The best protection for legalized workers remains the freedom to change jobs if pay or conditions are unsatisfactory. The fatal flaw of the bracero program was the fact that it tied workers too closely to specific employers as a condition of the visa. That gave employers too much leverage and encouraged the kinds of abuses that, when they became public, spurred Congress to shut the program down. A portable visa that allows temporary workers to freely choose who they work for with a minimum of red tape would enhance their bargaining power in the marketplace, improving their pay and working conditions.
Worker mobility would also benefit the economy overall. It would allow workers to shift from one region of the country or sector of the economy to another in response to changing conditions. For example, when the housing sector turns down, temporary workers would be free to shift to the retail or hospitality sectors.
Legalized workers with full freedom to change jobs would not need a raft of new labor laws to protect their rights. True reforms must avoid stifling labor regulations that discourage legal hiring. Union leaders pressured Democrats to require that temporary workers be paid prevailing wages—that is, artificially high, union-level wages rather than market wages. That would be a recipe for failure, since many of the jobs filled by immigrant workers are low-skilled, low-wage jobs that would simply not exist in the legal economy if union-level wages were mandated. Adding cumbersome labor rules will only perpetuate the underground labor market that the current system has created.
Mandating that employers pay above-market wages for low-skilled workers would only reduce growth and opportunities in the affected sectors of the economy. Productivity determines and limits pay earned by low-skilled workers. Wages paid to low-skilled workers tend to be low because their productivity is low. If pay were to rise above productivity, prices would need to rise, demand among consumers would fall, and investment and employment in the affected industries would slow or shrink. Ultimately, fewer jobs would be available in the affected sectors for native-and foreign-born workers alike.
Also unfounded are the claims that increased legal immigration will drive down the wages and working conditions for a broad swath of American workers. As was documented more fully in chapter 6, a small and declining share of the American workforce competes against immigrant workers. According to the authoritative 1997 National Research Council (NRC) study, The New Americans: Economic, Demographic, and Fiscal Effects of Immigration, the only two groups of Americans who face downward wage pressure from immigration are other recent immigrants and native-born Americans without high school diplomas. The wage impact on the affected American workers is not large. “The weight of the empirical evidence suggests that the impact of immigration on the wages of competing native-born workers is small—possibly reducing them by only 1 or 2%,” the authors concluded.16
More recent studies confirm the small impact of low-skilled immigration on competing American workers. In an August 2006 study for the National Bureau of Economic Research, economists Gianmarco Ottaviano and Giovanni Peri found that immigration during 1990–2004 lowered the real wages of the least educated U.S.-born workers by 1.1 to 2.2%, consistent with the NRC findings of a decade earlier. The study found that for all other native-born American workers, that is, those with at least a high school diploma, immigration delivered real wage gains in the long run of between 0.7 and 3.4% through lower prices and a more efficient economy.17
The key to raising wages for low-skilled American workers is to improve their levels of education and training. Americans with a high school but no college education earned a median annual income in 2005 of $25,829 compared to median annual earnings of $18,435 for workers without a diploma. That represents a 40% wage premium for finishing high school.18 Enabling and urging young Americans to graduate from high school will do far more to raise the earnings of American workers than barring low-skilled immigrants from the country.
Finally, comprehensive immigration reform should offer a path to legal status for the millions of workers already here without authorization. It would be an economic and humanitarian disaster, as well as an enforcement nightmare, to round up the 12 million people already here illegally and deport them back to their home countries.
Any realistic immigration reform must recognize that many undocumented workers have become valuable members of their workplace and communities. Most have been in the country for five years or more, and 40% have been here for more than a decade.19 Their contributions to the U.S. economy should be recognized and weighed against their violation of U.S. immigration laws.
Long-standing critics of comprehensive immigration reform will brand any legalization as an amnesty. But the dictionary defines amnesty as a general pardon, in particular for political offenses. Legalization would not be a pardon or amnesty because, according to the most serious proposals put forward in Congress, undocumented workers would be expected to pay fines and back taxes. They would undergo security checks and could even be required to leave the country briefly before being allowed to enter legally. They would not be granted the automatic permanent legal status that was a core feature of IRCA but only temporary status to remain and work in the United States for a specified period of time.
Americans expect the law to be respected and obeyed and those who violate our laws to face the appropriate consequences. But at the same time, laws must be reasonable and not fundamentally out of step with how millions of otherwise peaceful and hardworking people arrange their lives. That was the fatal flaw of the fifty-five-mile-per-hour speed limit in the 1970s and Prohibition in the 1920s and 1930s. Any punishment must also fit the infraction. In the case of immigration, several million foreign-born workers are guilty of engaging in an activity that is not inherently criminal—crossing an international border to provide labor for willing employers and additional income for their families back home.
Legalization would not necessarily mean automatic permanent status and a path to citizenship. Most workers who enter the United States illegally intend to stay here temporarily. If workers allowed in under a temporary worker program or formerly undocumented workers who gain legal status want to become permanent residents, they should be required to wait their turn behind those who have applied under existing channels. At the same time, the government should accelerate existing applications to reduce the backlog and expand the number of green cards available to accommodate the long-term labor needs of the growing U.S. economy.
Like the temporary worker program, the legalization of workers already in the United States must be workable. The penalties and procedures must not be so onerous that millions of illegal workers decide to continue their underground existence in the U.S. labor market. Immigration reform, to be successful, must balance the political demand that illegal workers pay a penalty for breaking U.S. immigration law with the reality that our nation would be better off with 12 million immigrants in our country legally rather than illegally.
One frequently heard criticism of comprehensive immigration reform is that it would prove too costly to taxpayers. The mostly low-skilled workers who would be admitted and legalized under the proposed reform would, on average, pay less in taxes than native-born Americans and presumably consume more means-tested welfare services. Critics of reform argue that legalizing several million undocumented workers and allowing hundreds of thousands of new workers to enter legally each year would ultimately cost American taxpayers billions and even trillions of dollars.
Championing this argument has been the Heritage Foundation, which released two papers on the eve of the Senate debate in 2007 that estimated huge fiscal costs from any legalization program (see chapter 11, by Robert Rector, for a similar contribution to this debate). One Heritage paper claimed that the total cost to taxpayers of legalizing 12 million currently unauthorized immigrants would be $2.6 trillion during the next fifty years, mostly because of additional obligations to federal retirement programs such as Social Security.20 Another Heritage paper claimed that each “low-skilled household” (those headed by a high school dropout) costs federal taxpayers $22,449 a year. Spread out over fifty years of expected work, the average lifetime cost of such a family would supposedly balloon to $1.1 million. The total annual cost to taxpayers of the 17.7 million such households that Heritage counted for 2004 was $397 billion, which would mean that total cost over the next ten years “is likely to be at least 3.9 trillion dollars.” Drawing the connection to immigration reform, the paper warned, “This number would go up significantly if changes in immigration policy lead to substantial increases in the number of low-skill immigrants entering the country and receiving services.”21
The Heritage papers artificially inflate the fiscal impact of low-skilled immigration in at least two major ways. First, neither paper discounts the value of future taxes and expenditures. One billion dollars paid or collected forty years from now is simply not worth the same as one billion dollars today. In fact, it is worth much less because of inflation and the prevailing rate of interest (that is, the discount rate). Yet, the Heritage study counts a dollar paid or collected forty or fifty years in the future as worth exactly the same as a dollar today. A direct result is that the costs of immigration it projects decades into the future are grossly exaggerated.22
A second major flaw in Heritage accounting is that it ignores the long-term decline in the number of “low-skilled households.” According to the U.S. Census Bureau, the number of households headed by someone without a high school diploma declined from 17.5 million in 1996 to 14.8 million in 2006. That is a drop of 2.7 million, or 15%, during the decade. The share of total U.S. households in the low-skilled category dropped during that same period from 18.3% to 13.6%.23
Despite the ominous implications of the Heritage papers, low-skilled immigration from Latin America has not swelled the low-skilled underclass, but instead has changed its demographic profile while it continues to shrink in size. The number of low-skilled households headed by a Hispanic did indeed increase, undoubtedly driven in large part by immigration, but the number of low-skilled households headed by a non-Hispanic dropped even more rapidly, leading to an overall reduction.24 For every increase in one Hispanic-headed low-skilled household during the past decade, the number headed by a non-Hispanic dropped by three. To the extent that low-skilled immigration increases the incentive for native-born Americans to stay in school and upgrade their skills, immigration itself may be one of the reasons for the continuing overall decline in low-skilled households.
Even if we accept the Heritage estimates for the fiscal cost of a single low-skilled household, the total cost for all such households has been trending sharply down during a period of significant immigration of low-skilled workers from Latin America. There is no reason to believe that trend would reverse if the current inflow and population of unauthorized immigrants were transformed into a legal inflow and population.
More credible estimates contradict the wilder estimates of the fiscal impact of low-skilled immigrants. In June 2007 the Congressional Budget Office concluded that the Comprehensive Immigration Reform Act of 2007 (S 1348) then before the U.S. Senate “would exert a relatively small net effect on the federal budget balance over the next two decades, since additional expenditures would be mostly offset by additional revenue.”25
Specifically, CBO estimated that direct federal spending would increase by $23 billion in the first decade after the reform became law (2008–17), mostly for Medicaid and refundable income tax credits. Federal revenues would increase by $48 billion during the same period largely because of increased receipts for Social Security taxes.26 The net cost of the legislation would rise after 2017 as more of the legalized immigrants became eligible for benefits, but the CBO still concluded that “the net impact on the unified budget (including changes in both expenditures and revenues) would remain relatively small in the context of the overall budget.”27
One frequently cited figure on the cost of low-skilled immigration comes from the 1997 National Research Council study cited above. The study calculated the lifetime fiscal impact of immigrants with differing educational levels. The study expressed the impact in terms of net present value, that is, the cumulative impact in future years expressed in today’s dollars. The study estimated the lifetime fiscal impact of a typical immigrant without a high school education to be a negative net present value of $89,000.28 Skeptics of immigration reform often cite that figure.
What is less often considered is that the NRC study also measured the fiscal impact of the descendants of immigrants. This gives a much more accurate picture of the fiscal impact of low-skilled immigrants. It would be misleading, for example, to count the costs of educating the children of an immigrant without considering the future taxes paid by the educated children once they have grown and entered the workforce. The children of immigrants typically outperform their parents in terms of educational achievement and income. As a result, the NRC calculated that the descendants of a typical low-skilled immigrant have a positive $76,000 fiscal impact, reducing the negative net present value of the fiscal impact of a low-skilled immigrant and descendants to $13,000.29
Even that figure does not give the full picture. As the NRC study was being written, Congress passed the 1996 Personal Responsibility and Work Opportunity Reconciliation Act, otherwise know as the 1996 Welfare Reform Act. The act contained an entire title devoted to restricting immigrant access to means-tested welfare, limiting access of noncitizens to such public benefit programs as food stamps and Medicaid. When the NRC study accounted for the 1996 Welfare Reform Act, the fiscal impact of a single low-skilled immigrant and descendants was further reduced to $5,000 in terms of negative net present value.30
If we accept the NRC estimates, then allowing an additional 400,000 low-skilled immigrants to enter the United States each year and stay would have a one-time, negative net present value impact on taxpayers of $2 billion. By the same calculation, the one-time, net-present-value cost of legalizing 8 million immigrant workers already in the United States would be $40 billion. Those costs, while not trivial, would need to be compared to the annual efficiency gains to the U.S. economy from a larger and more diverse supply of workers, and a wider range of more affordable goods and services for native-born Americans. Those costs are also lower by several orders of magnitude from the headline-grabbing claims of the Heritage Foundation.
Increased immigration has also been blamed for crowded roads, hospitals, public schools, and prisons. In all four of those cases, the negative impact of immigration has been exaggerated.
As for congestion of roads, immigration has played a secondary role in population growth nationally and at a more local level. Nationally, net international migration accounts for 43% of America’s annual population growth, with natural growth still accounting for a majority of the growth. On a local level, an analysis of U.S. Census data shows that for a typical U.S. county net international migration accounted for 28% of population growth between 2000 and 2006. Natural growth from births over deaths accounted for 38% of growth on a county level and migration from other counties 34%. A third of U.S. counties actually lost population between 2000 and 2006 as birthrates continued to fall and Americans migrated internally to the most economically dynamic metropolitan areas.31 If local roads seem more crowded, it is not typically immigration but natural growth and internal migration that are mostly responsible.
As for alleged overcrowding at public schools, low-skilled immigration cannot be singled out for blame. Enrollment in the public school system has actually been declining relative to the size of America’s overall population. The share of our population in K-12 public schools has fallen sharply in recent decades, from 22% of the U.S. population in 1970 to 16% today.32 As with roads, new births and internal migration are more likely to drive overcrowding in certain school districts than are newly arrived immigrants.
As for crime and the inmate population, again, immigration is not the major driver. Indeed, the violent crime rate in the United States has actually been trending down in recent years as immigration has been increasing. After rising steadily from the 1960s through the early 1990s, the rate of violent crime in the United States has dropped from 758 offenses per 100,000 people in 1991 to 469 offenses per 100,000 in 2005. As a recent study by the Immigration Policy Center concluded, “Even as the undocumented population has doubled since 1994, the violent crime rate in the United States has declined 34.2% and the property crime rate has fallen 26.4%.”33
Immigrants are less likely to be jailed than their native-born counterparts with similar education and ethnic background. The same IPC study found that, “for every ethnic group without exception, incarceration rates among young men are lowest for immigrants, even those who are least educated.”34 Other studies reveal that immigrants are less prone to crime, not because they fear deportation but because of more complex social factors.35 All the available evidence contradicts the misplaced fear that allowing additionally low-skilled immigrants to enter the United States will somehow increase crime and incarceration rates.
As for hospitals, especially emergency rooms, the presence of uninsured, low-skilled workers in a particular area does impose additional costs on hospitals in the form of uncompensated care. There is no evidence, however, that illegal immigration is the principal cause of such costs nationwide. Indeed, low-skilled immigrants tend to underutilize health care because they are typically young and relatively healthy.
A recent report from the Rand Corporation found that immigrants to the United States use relatively few health services. The report estimates that all levels of government in the United States spend $1.1 billion a year on health care for undocumented workers aged eighteen to sixty-four. That compares to a total of $88 billion in government funds spent on health care for all adults in the same age group. In other words, while illegal immigrants account for about 5% of the workforce, they account for 1.2% of public health care spending.36
Although the fiscal impact of low-skilled immigration has been exaggerated by opponents of reform, it can impose real burdens at a local level, particularly where immigration inflows are especially heavy. The 1997 National Research Council study found that, while the fiscal impact of a typical immigrant and his or her descendants is strongly positive at the federal level, it is negative for state and local governments.37
Those state and local fiscal costs, while real, must be weighed against the equally real and positive effect of immigration on the overall economy. Low-skilled immigrants allow important sectors of the U.S. economy, such as retail, cleaning, food preparation, construction, and other services, to expand to meet the needs of their customers. They help the economy produce a wider array of more affordably priced goods and services, raising the real wages of most Americans. By filling gaps in the U.S. labor market, such immigrants create investment opportunities and employment for native-born Americans. Immigrants are also consumers, increasing demand for American-made goods and services.
Several state-level studies have found that the increased economic activity created by lower-skilled, mostly Hispanic, immigrants far exceeds the costs to state and local governments. A 2006 study by the Kenan Institute of Private Enterprise at the University of North Carolina at Chapel Hill found that the rapidly growing population of Hispanics in the state, many of them undocumented immigrants, had indeed imposed a net cost on the state government of $61 million, but the study also found that those same residents had increased the state’s economy by $9 billion.38
A 2006 study by the Texas Comptroller of Public Accounts reached a similar conclusion. Examining the specific fiscal impact of the state’s 1.4 million undocumented immigrants, the study found that they imposed a net fiscal cost on Texas state and local governments of $504 million in 2005. The fiscal cost, however, was dwarfed by the estimated positive impact on the state’s economy of $17.7 billion.39
The right policy response to the fiscal concerns of immigration is not to artificially suppress labor migration but to control and reallocate government spending. The 1996 Welfare Reform Act was a step in the right direction. It recognized that welfare spending was undermining the long-term interests of low-income households in the United States, whether native-born or immigrant, by discouraging productive activity. The law led to a dramatic decrease in the use of several major means-tested welfare programs among native-born and immigrant households alike. Further restrictions on access to welfare for temporary and newly legalized foreign-born workers would be appropriate.
Another appropriate policy would be some form of revenue sharing between the federal and state and local governments. The federal government could compensate state and local governments that are bearing especially heavy upfront costs from the increase in low-skilled immigration. The transfers could offset additional costs for emergency-room health care services and additional public school enrollment. Such a program would not create any new programs or additional government spending but would simply reallocate government revenues in a way that more closely matched related spending.
Misplaced apprehensions about the fiscal impact of immigration do not negate the compelling arguments for comprehensive immigration reform, nor do they justify calls for more spending on failed efforts to enforce our current, dysfunctional immigration law. If the primary goal is to control the size of government spending, then Congress and the president should seek to wall off the welfare state, not our country.
The next Congress and president can solve the vexing problem of illegal immigration into the foreseeable future with the right policy changes. What is needed is comprehensive immigration reform that recognizes the fundamental realities of the U.S. economy and labor force.
Comprehensive immigration reform that followed the guidelines outlined above could be expected to dramatically lower illegal entries into the United States and the tragic death toll at the border. It would empower newly legalized workers to bargain more effectively in the workplace for better wages and working conditions, allowing those workers to enjoy the law’s full protections and responsibilities. It would free the Homeland Security Department to focus its resources on identifying and apprehending terrorists and criminals rather than wasting billions of tax dollars chasing after peaceful, hardworking people seeking better jobs.
Comprehensive reform would provide a predictable, legal, and modestly growing labor force, which would in turn allow our market economy to produce a wider and more affordable array of goods and services for American households, raising living standards for the large majority of American workers. It would reaffirm our ideals as a nation that has traditionally welcomed immigrants who come here to work hard and build better lives for themselves and their families.